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by 

Earl   C .    Sams 


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ORGANIZATION 

and 

MEN 


EARL   C.   SAMS 

President  J.  C.  Penney  Company 


*» 


Address  delivered  at  the  St.  Louis, 
St.  Paul,  Portland  and  Salt  Lake  City 
Conventions  of  the  J.  C.  Penney 
Company,  September  and  October, 
1921. 


m 


Organization 

and 

Men 

"By 
EARL   C.  SAMS 

President  J.  C.  Penney  Company 
*8 


Address  delivered  at  the  St.  Louis, 
St.  Paul,  Portland  and  Salt  Lake  City 
Conventions  of  the  J.  C.  Penney 
Company,  September  and  October, 
1921. 


New  York 

Printed  by  Madison  Square  Press 

1921 


Copyright,    1921 

by 

J.   C.  Penney   Company 


/ 


To 
ROGER  W.  BABSON 

in  appreciation 

of  his  distinguished 

services  as  a  student  of 

Fundamental  'Business 

Conditions. 


00 


e? 


Organization  and  Men 


i. 

Our  Organization 

GENTLEMEN,  with  your  permission,  I  will 
spend  a  few  minutes  in  telling  you  about  the 
beginning  of  our  business.  That  is,  I  will  try 
to  tell  you  about  some  of  the  earlier  experiences  of 
our  Company,  showing  how  our  business  has 
progressed  from  its  inception  to  the  time  when  we 
were  incorporated. 

The  Kemmerer  store,  as  you  know,  was  opened 
by  the  Founder  of  this  Organization  in  1902.  You 
have  heard  him  tell  many  times  of  those  early  years. 
You  have  read  many  of  the  interesting  articles  he 
has  written  about  the  sacrifices  he  made,  in  order 
that  you  and  I  might  be  a  part  of  this  Organization 
today. 

The  story  of  my  own  personal  experiences  does 
not  go  back  quite  so  far  as  the  beginning.  But  I 
vividly  recall  the  autumn  of  1907  when  I  took  up 
my  duties  at  the  Kemmerer  store.  At  that  time 
Mr.  Penney  was  a  one-third  owner,  with  Mr.  John- 
son and  Mr.  Callahan,  in  the  Kemmerer  store.  He 


430221 


also  was  a  one-third  owner  in  a  store  at  Cumber- 
land and  part  owner  in  a  store  at  Rock  Springs. 
This  was  the  extent  of  Mr.  Penney's  interest  in 
October,  1907. 

Shortly  after  that  time,  he  sold  his  interest  in  the 
Rock  Springs  store  to  his  partner,  at  the  same  time 
securing  full  ownership  of  the  Kemmerer  and 
Cumberland  stores. 

The  morning  of  October  1,  1907,  was  cold  and 
crisp.  That  was  the  morning  when  I  entered  upon 
my  activities  in  the  Kemmerer  store,  and  I  noticed, 
as  I  walked  to  the  store,  that  one  could  write  his 
name  in  the  frost  on  the  broad  sidewalks.  I  need 
not  dwell  on  the  impressions  I  received  at  that 
time,  because  I  feel  that  every  one  of  you  has  gone 
through  a  similar  experience  and,  therefore,  you 
know  the  feeling  of  anticipation  that  I  experienced. 
I  was  met,  as  I  entered  the  store,  by  a  young  man 
with  black  eyes  and  black  hair  who,  though  he  has 
been  able  to  retain  the  black  eyes,  has  since  that 
time  lost  most  of  the  hair.  He  directed  me  to  go 
to  work  and  I  did.  It  was  not  long  before  there 
were  plenty  of  customers  to  wait  on  and  I  found 
much  to  do. 

Time  passed  quickly  and,  in  the  spring  of  1908, 
we  went  to  Cumberland,  Wyoming.  Our  little 
store  there,  as  most  of  you  know,  was  about  a  mile 
from  town.  The  town  itself  was  controlled  by  the 
coal  company  and  no  outside  interests  were  permit- 
ted to  enter.  It  was  necessary,  therefore,  that  we 
go  outside  of  the  corporate  limits  in  order  to  do 
business.  Our  little  store  was  about  twenty-five 
by  forty  feet,  but  had  rooms  at  the  back.    In  these 


we  lived.  Modern  conveniences  were  entirely- 
wanting;  indeed,  we  had  to  haul  our  water  from  a 
creek  about  half  a  mile  away.  Most  of  the  time  it 
was  so  muddy  that  we  had  to  let  the  water  stand  in 
the  barrel  until  it  became  clear  enough  for  us  to 
drink. 

Prior  to  my  coming  to  Cumberland  Mr.  Neigh- 
bors, who  was  my  predecessor  there,  had  been  sent 
to  Preston  and  Mr.  Mudd,  who  is  the  man  with  the 
black  eyes  and  hair  I  have  just  referred  to,  had 
been  sent  to  Bingham  Canyon.  Here  they  received 
their  first  interest  in  stores. 

We  spent  a  year  in  Cumberland.  Some  of  you 
may  think  from  my  description  of  the  town  that  it 
was  a  great  sacrifice  for  us  to  live  there.  Gentlemen, 
T  want  to  tell  you  that  we  never  thought  of  it  as  a 
sacrifice ;  and  when  we  went  there  to  begin  business 
and  to  make  our  home,  we  had  no  idea  how  long 
we  were  going  to  stay.  Nor  would  it  have  made 
any  difference  if  we  had  known.  This  business  was 
then  in  the  process  of  making.  We  had  no  prom- 
ises and  no  intimation  as  to  how  long  it  might  take 
us  to  work  out  our  future  or,  rather,  to  help  work 
it  out.  We  lived  in  two  little  rooms  and  my  wife 
has  said  to  me,  many,  many  times  since,  that  the 
year  we  spent  in  Cumberland  was  one  of  the  hap- 
piest of  our  lives.  The  old  saying,  There  is  more 
pleasure  to  travel  hopefully  than  to  arrive,  is  as 
true  as  Gospel.  We  were  living  in  anticipation  of 
the  future.  We  had  Faith.  We  hoped  for  better 
things.  I  might  tell  you  that  our  salary  for  that 
year  was  $1,500,  that  means  for  our  combined  ser- 
vices.    Out  of  the  $1,500  which  represented  our 


year's  pay,  we  saved  just  a  little  under  $1,000.  We 
were  trying  to  save  for  our  future.  Therefore,  we 
denied  ourselves  a  good  many  things  that  we 
wanted.  And  we  did  it,  hoping  that  some  time  we 
should  be  better  able  to  afford  what  our  desires 
called  for. 

At  the  end  of  our  year  in  Cumberland,  we  were 
sent  to  Eureka,  Utah,  where  we  received  our  first 
interest  in  a  store.  At  that  time,  the  firm  names 
were  J.  C.  Penney  in  Kemmerer  and  Cumberland; 
Neighbors  and  Penney  in  Preston;  Mudd  and  Pen- 
ney in  Bingham  Canyon;  and  Sams  and  Penney  in 
Eureka.  The  stores  were,  in  fact,  a  group  of  part- 
nerhips.  Others  came  into  the  business  and,  from 
time  to  time,  new  stores  were  started  thus  creating 
other  partnerships.  And  so  we  grew  from  year  to 
year. 


*$ 


10 


II. 

Why  We  Changed  from  a  Partnership  to  a 
Corporation 

During  the  year  1912  it  became  apparent  that, 
if  we  wished  to  take  advantage  of  the  consolidated 
credit  to  which  our  business  entitled  us,  it  would  be 
necessary  for  us  to  formulate  a  plan  that  would 
permit  of  our  pooling  our  interests  so  that  the  com- 
bined assets  of  all  would  support  any  obligation 
which  we  might  make  as  a  whole.  In  other  words, 
we  thought  it  well  to  incorporate  our  Organization 
and  to  have  one  governing  body  over  all  our  indi- 
vidual interests.  We  hesitated  to  do  this  for  a  long 
time,  because  it  seemed  almost  impossible  to  work 
out  a  plan  that  would  permit  of  our  retaining  the 
partnership  idea  and  yet  enjoying  the  advantages 
of  incorporation.  However,  after  careful  thought, 
the  plan  was  worked  out  and  we  incorporated  in 
the  spring  of  1913  under  the  name  of  the  J.  C.  Pen- 
ney Company. 

Now,  I  have  explained  to  you  why  it  was  neces- 
sary for  us  to  incorporate  and  I  want,  as  best  I  can, 
to  explain  to  you  the  kind  of  corporation  we  are. 
I  want  every  one  of  you  to  understand  exactly  the 
kind  of  proposition  you  have  entered  into,  so  that 
you  may  know  all  about  this  Organization,  both 
how  it  is  constructed  and  how  it  is  conducted;  in 
fact  all  there  is  to  know.  There  is  nothing  about 
this  business,  known  to  the  Directors,  that  may  not 
be  revealed  to  its  every  stockholder.  There  are 
absolutely  no  secrets  and  if,  after  I  have  explained 
our  corporate  formation  as  best  I  can,  any  questions 
occur  to  you,  I  want  you  to  feel  free  to  ask  them. 

11 


For  my  part,  I  will  do  the  best  I  can  to  answer 
them  satisfactorily.  Therefore,  note  the  following 
facts : 

1.  This  Corporation  is  known  as  the  J.  C.  Pen- 
ney Company. 

2.  The  names  of  those  who  now  hold  stock  in 
this  Organization  are  too  numerous  to  mention,  but 
every  man  who  has  a  stock  certificate  is  a  stock- 
holder. 

3.  We  are  incorporated  under  the  laws  of  the 
State  of  Utah  and  our  main  office  is  at  Salt  Lake 
City. 

4.  The  Corporation  is  created  to  exist  for  a 
period  of  one  hundred  years,  unless  sooner  dis- 
solved by  law. 

5.  The  private  property  of  the  stockholders  of 
this  Corporation  is  not  liable  for  any  obligations 
or  bad  debts  of  the  Corporation,  in  any  manner  or 
to  any  extent  whatever. 

6.  The  principal  place  of  business  of  the  Com- 
pany is  Salt  Lake  City.  The  Board  of  Directors 
may  establish  branch  offices  and  places  of  business 
anywhere  in  the  United  States. 

7.  We  are  incorporated  to  deal  in  all  kinds  of 
merchandise;  to  lease,  let,  deed  and  acquire  prop- 
erty; to  purchase  and  dispose  of  notes,  bonds  and 
mortgages;  to  own  stock  in  other  corporations  and 
to  conduct  business  in  as  many  branches  as  we  see 
fit.  In  fact,  our  privileges  are  so  many  that  we 
may  carry  on  almost  any  kind  of  business  we  de- 
sire. 

12 


8.  The  amount  of  our  capitalization  has  been 
changed,  from  time  to  time,  as  need  demanded. 
At  the  present  time  we  have  an  authorized  Com- 
mon stock  of  $5,000,000,  of  which  there  has  been 
issued  and  sold  $3,626,000;  and  we  have  an  author- 
ized Preferred  stock  of  $10,000,000,  of  which  there 
has  been  issued  and  sold  $3,000,000.  So  our  issued 
Capital  stock,  as  you  see,  is  the  total  of  the  out- 
standing Common  stock  plus  the  outstanding  Pre- 
ferred stock  or  $6,626,000. 

The  Preferred  stock  has,  as  the  name  indicates, 
preference  over  the  Common  stock.  That  is  to  say, 
in  case  of  liquidation,  those  holding  the  Preferred 
stock  are  to  be  paid  first;  then  the  Common  stock- 
holders follow. 

The  Preferred  stock  is  seven  per  cent,  cumula- 
tive. And  cumulative  means  that,  if  we  should 
pass  a  dividend  on  the  Preferred  stock,  we  are  obli- 
gated to  pay  it,  at  some  future  time,  out  of  the  earn- 
ings of  the  Company  set  aside  for  that  purpose. 
In  short,  no  Preferred  dividends  may  be  perma- 
nently passed,  for  they  are  an  obligation  of  the 
Company  to  be  paid  when  earned  and  ahead  of  any 
other  stock  dividend. 

Preferred  stock  is  non-assessable  for  the  obliga- 
tions of  the  Company.  The  assets  of  all  classifica- 
tions of  Common  stock  are  assessable  for  the  obli- 
gations of  the  Company  and,  as  you  know,  the  Di- 
rectors have  levied  a  certain  assessment  annually 
for  the  maintenance  of  the  different  operating 
offices. 

13 


Now,  at  the  time  this  Preferred  stock  was  issued 
and  sold,  certain  agreements  were  entered  into 
between  the  Company  and  those  who  purchased 
the  Preferred  stock.  As  those  agreements  may  not 
be  entirely  clear  to  the  Common  stockholders,  I 
will  explain  them.  One  of  the  most  important 
agreements  we  made  with  our  Preferred  stock 
purchasers  was  that  we  would  not  declare  divi- 
dends on  the  outstanding  Common  stock  unless  the 
earnings  of  the  previous  year  were  at  least  three 
times  the  amount  of  the  interest  on  the  outstanding 
Preferred  stock.  That  means  simply  this:  We 
have  $3,000,000  outstanding  Preferred  stock  and 
the  interest  on  it,  at  seven  per  cent,  is  $210,000  a 
year.  Three  times  $210,000  is  $630,000.  That  is 
the  amount  we  must  earn,  in  any  year,  before  we 
can  declare  a  Common  stock  dividend.  We  have 
further  agreed  with  our  Preferred  stockholders  to 
retire  every  year  three  per  cent,  of  the  total  amount 
of  Preferred  stock  or  $150,000.  This  has  been 
done.  It  is  also  specified  between  us  and  our  Pre- 
ferred stockholders  that,  when  we  wish  to  buy  in 
or  retire  the  Preferred  stock,  we  shall  be  privileged 
to  do  so  at  the  lowest  possible  rates  but  not  to  ex- 
ceed $105  per  share.  So  you  see,  at  any  time  we 
desire  to  do  so,  we  are  privileged  to  offer  our  Pre- 
ferred stockholders  $105  for  every  $100  worth  of 
stock  they  hold  and,  by  agreement,  they  must  sell 
to  us. 

9.  We  also  agreed,  with  those  who  bought  this 
$3,000,000  of  our  Preferred  stock,  that  we  would 
issue  no  more  of  the  authorized  $10,000,000  unless 
the  earnings  for  the  preceding  year  amount  to  at 

14 


least  three  times  the  annual  dividend  on  the  Pre- 
ferred stock  outstanding  plus  that  proposed  to  be 
issued. 

10.  Now  we  come  to  Article  10,  which  specifies 
the  manner  in  which  we  shall  dispose  of  our  Com- 
mon stock,  should  we  so  desire.  Subscriptions  for 
the  ownership  of  J.  C.  Penney  Company  Common 
stock  are  taken  upon  the  condition  that,  if  the  pur- 
chaser and  holder  thereof  desires  to  sell  the  same, 
he  shall  first  deliver  his  stock  to  the  Board  of  Di- 
rectors. The  Board  of  Directors  shall  fix  the  sell- 
ing price  of  said  stock  by  computing  its  value  with 
reference  to  the  books  of  the  Company.  In  other 
words,  the  value  of  the  stock  is  just  what  the  books 
of  our  Company  indicate  it  to  be.  In  no  case  is 
Good  Will  taken  into  account.  After  the  value  of 
the  stock  has  been  computed,  the  Board  of  Direct- 
ors must  then  offer  this  stock  for  sale  to  the  co- 
owners  of  this  same  class  of  stock.  They  are  al- 
lowed thirty  days  in  which  to  exercise  their  option. 
In  case  the  co-owners  of  this  class  of  stock  (that  is, 
Common  stock)  do  not  desire  to  purchase  it,  then 
the  Board  of  Directors  may  offer  it  to  anyone  else. 
If  it  is  not  sold  within  thirty  days,  the  holder  of  the 
stock  shall  be  free  to  offer  it  for  sale  to  anyone  that 
he  may  desire. 

I  trust  the  reasons  for  this  particular  manner  of 
making  disposition  of  our  Common  stock  are  clear 
to  you.  We  have  a  splendid  Organization.  Every- 
one in  it  is  active  and  anxious  to  promote  it.  And 
we  hope  to  see  our  stock  remain  in  the  hands  of 
those  who  are  active,  rather  than  to  have  it  become 
the  property  of  those  who  are  inactive. 

15 


III. 

The  New  Man's  Opportunities 

At  this  point  I  want  to  say  something  about  the 
opportunities  a  man  has  who  comes  into  our  Or- 
ganization. I  want  to  emphasize,  as  best  I  know 
how,  the  advantages  that  a  man  begins  immediately 
to  enjoy  who  becomes  a  part  of  this  Organization. 
In  my  judgment,  a  man  is  remunerated  many 
times  over  for  any  sacrifices  he  may  make,  or 
think  he  makes,  in  coming  to  us.  I  do  not 
believe  that  any  man,  coming  into  our  Organiza- 
tion, no  matter  how  much  knowledge  and  expe- 
rience he  may  have,  can  hope  to  bring  into  the  Or- 
ganization anywhere  nearly  the  degree  of  value 
and  worth  that  he  receives  from  the  Organization 
after  he  becomes  a  part  of  it. 

Have  you  ever  stopped  to  think  what  enormous 
benefits  we  confer  upon  the  man  who  comes  to  us 
and  advances  into  a  Manager's  position?  If  you 
will  stop  a  moment  to  consider  what  active  partner- 
ship in  this  Organization  means,  you  will  see  that 
we  confer  upon  the  new  man  an  unusual  benefit. 
The  new  man  who  comes  into  our  Company,  now 
nearly  twenty  years  old,  joins  an  Organization  that 
has  accumulated  the  benefits  of  wide  experience, 
that  has  built  itself  upon  a  solid  financial  basis,  that 
has  established  lines  of  commercial  association 
with  the  best  types  of  business  houses,  that  has  ex- 
tended its  chain  from  the  North  to  the  South  of  our 
country  and  from  the  West  to  the  East,  that  has 
grown  from  a  gross  annual  business  of  less  than 
$30,000  for  the  first  year  to  $50,000,000  today.  I 
want  to  tell  you  that  the  new  man  who  comes  with 

16 


us  today  is  the  recipient  of  great  privileges.  His 
own  experience  may  have  been  considerable  and 
he  may  have  been  in  business  long  enough  to  learn 
retail  merchandising  well;  but  it  would  be  impos- 
sible for  any  man  to  bring  into  this  Organization 
anything  whatsoever  that  is  commensurate  with 
the  rights,  benefits,  privileges  and  opportunities 
that  we  bestow  upon  him,  the  moment  he  joins  our 
forces.  Therefore,  I  want  to  emphasize  the  fact 
that  we  are  right  to  demand  the  finest  type  of  men 
on  whom  to  bestow  the  privileges  of  association 
with  us. 

Organization  offers  a  man  infinitely  more  than 
he  can  command  from  within  himself.  It  multi- 
plies his  arms  and  hands  and  fingers,  so  to  speak. 
Certainly,  it  augments  the  mental  area  of  his  work. 
Not  all  men  are  equally  endowed.  Some  men  are 
natural  financiers,  others  are  born  buyers,  still 
others  are  organizers,  and  some  have  the  gift  for 
accounting. 

Now,  all  of  these  operations  are  absolutely  es- 
sential in  the  conduct  of  business.  It  is  impossible 
for  any  one  man  to  have  all  these  attributes  and, 
therefore,  a  one  man  business  must  necessarily  be 
weak  in  some  one  of  these  particulars.  But  in  an 
Organization  it  is  possible  to  include  the  natural 
financier,  the  gifted  buyer,  the  skilled  organizer, 
the  expert  accountant  and  all  other  men  of  creative 
genius  whose  purpose  and  power  foresee  and  plan 
for  the  future. 

Therefore,  a  man  who  has  the  privilege  of  join- 
ing a  company  like  ours  connects  himself  im- 
mediately with  a  highly  efficient  and  closely  articu- 

17 


lated  group  of  men,  everyone  gifted  in  his  own 
line. 

As  I  said  in  the  beginning,  these  skillful  and 
gifted  men  augment  the  man  himself,  for  the 
Organization  places  at  every  man's  disposal  the 
benefits  of  the  expert  knowledge  and  service  of 
every  other  man  in  it. 

Men,  let  us  make  it  our  personal  ambition  to 
measure  up  to  the  type  worthy  of  association  with 
this  great  Organization.  Let  us,  in  training  men, 
train  them  into  this  worthiness.  Let  us,  in  looking 
to  the  future,  see  not  only  a  greater  Organization 
and  a  greater  business  but  ourselves  correspond- 
ingly greater  in  ability  to  have  vision  to  do  the 
day's  job,  to  train  men  and,  finally,  to  represent 
adequately  this  Nation-wide  Institution  which  be- 
stows richly  its  benefits  and  opportunities  upon  its 
associates. 


1? 


18 


IV. 

Our  Capital  Stock  Accounts 

When  a  new  store  is  opened  a  certain  amount 
of  Capital  stock  is  set  up  for  the  purpose  of  carry- 
ing on  the  business  of  that  particular  store.  In 
other  words,  every  store  is  supposed  to  have  suf- 
ficient capital  to  carry  on  its  business.  Many  of 
you  know  that  in  the  past  there  have  been  viola- 
tions of  this  rule.  Sometimes  the  Capital  stock 
has  been  insufficient  and,  at  other  times,  the 
Manager  of  a  particular  store  has  failed  to  live 
up  to  the  requirements.  But  that  does  not  change 
the  fundamental  principle,  which  is  that  every 
store  must  have  capital  sufficient  to  carry  on  the 
business  operations  which  it  represents. 

Since  the  issuance  of  our  Preferred  stock  we 
have  made  it  a  rule  that,  when  a  certain  amount  of 
Common  stock  is  set  up  for  a  store,  there  shall  go 
with  this  Common  stock  its  quota  of  Preferred. 
This,  at  the  present  time,  is  forty  per  cent.  The  un- 
derstanding is  that,  when  any  new  classification 
earns  a  sufficient  amount  or  has  added  to  its  sur- 
plus more  than  it  needs  for  the  carrying  on  of  that 
particular  store,  such  amount  can  be  declared  in 
the  form  of  a  dividend  to  the  co-owners  of  that 
stock. 

Now  those  of  you,  who  have  accumulated  a  lot 
of  money  and  have  quite  a  lot  of  cash  on  hand  to- 
day, must  not  confuse  Preferred  stock  money  with 
Common  stock  money.  In  other  words,  before 
you  can  arrive  at  how  much  money  you  have  for 
your  own  individual  use,  you  must  first  subtract 
from  your  Common  stock  capital  and  surplus  that 

19 


amount  which  is  Preferred  capital.  Therefore, 
before  you  can  start  a  new  store,  you  must  have 
accumulated  Common  stock  capital  enough  to 
capitalize  the  proposed  new  store. 

Of  course  you  know  that  before  we  can  start  a 
branch  store  with  the  earnings  of  any  particular 
store,  we  must  have  money  in  excess  of  the  needs 
of  that  particular  store.  In  other  words,  we  can- 
not reduce  our  inventory  in  the  last  few  months  of 
the  year  and  take  out  all  the  cash  on  hand.  We 
must  figure  that  there  must  be  capital  and  surplus, 
that  there  must  be  enough  operating  capital  in  a 
store  to  do  a  volume  of  business  of  say  five  times 
the  amount  of  this  operating  capital.  In  other 
words,  we  figure  that  it  would  not  be  conservative 
for  us  to  try  to  operate  a  business  with  less  capital 
than  one-fifth  of  the  amount  of  the  volume  of  busi- 
ness we  expect  to  do  annually.  Another  way  to 
figure  it  is  this:  A  turnover  of  five  is  a  big  turn- 
over. We  have  stores,  it  is  true,  that  do  better  than 
this,  and  we  have  some  that  do  not  do  so  well.  And 
while  our  average  turnover  is  not  so  great  as  this, 
I  think  we  are  fair  in  calculating  on  the  basis  of  a 
turnover  of  five. 


W 


20 


V. 

Future  Plans 

Now  I  know  you  are  all  interested  in  learning 
something  of  the  prospects  for  the  immediate  fu- 
ture. I  know  that  you  are  all  anxious  to  start  new 
stores  just  as  soon  as  you  can,  and  I  assure  you  that 
no  one  is  more  anxious  than  the  members  of  the 
Board  of  Directors  to  see  started  every  new  store 
which  we  have  the  money  to  open  and  the  men  to 
manage. 

In  the  first  place,  we  opened  approximately  one 
hundred  new  stores  in  the  spring  of  1920.  I  need 
not  tell  you  in  detail  for  I  am  sure  that  most  of  you 
know  that  these  hundred  new  stores  did  not  prove 
to  be  very  successful.  In  other  words  we  opened 
them  at  an  inopportune  time,  with  the  result  that 
some  of  these  hundred  new  stores  are  going  to  re- 
tard the  progress  of  their  mother  stores  until  such 
time  as  they  get  in  position  to  finance  themselves. 
Let  me  illustrate  what  I  mean. 

I  will  take  a  store  in  which  I  am  financially  in- 
terested. This  particular  store  has  on  hand  today 
something  like  $35,000  in  cash.  After  deducting 
from  this  its  Preferred  stock  quota,  it  will  have  on 
hand  approximately  $20,000.  This  store  is  the 
mother  store  of  one  of  those  started  in  1920.  The 
child  store  is,  so  to  speak,  "in  bad,"  and  at  the  end 
of  this  year,  so  we  have  every  reason  to  believe, 
will  be  using  practically  all  of  the  available  cash 
the  mother  store  has  on  hand.  This  being  the  case, 
we  figure  that  this  mother  store  cannot  start  another 
branch  until  its  latest  child  is  able  to  keep  itself. 

21 


Now  to  get  back  again  to  our  plans  for  the  im- 
mediate future,  I  am  sure  that  it  is  the  wish  of 
every  man  who  is  a  part  of  this  Organization  to  go 
ahead  and  expand  the  business  as  fast  as  it  can  be 
expanded  and  still  be  operated  along  conservative 
and  consistent  lines.  In  other  words  the  slogan  is 
LET'S  GO. 

We  are  planning  to  open  just  as  many  new  stores 
this  next  year  as  we  can  get  money  together  to 
finance.  It  is  a  wise  procedure,  I  am  sure,  and 
one  that  every  prospective  Manager  will  endorse, 
to  wait  until  after  our  next  inventory  and  then,  in- 
stead of  estimating  our  profits  and  available  cash, 
we  shall  have  in  hand  the  concrete  thing. 

So,  immediately  following  our  next  inventory, 
we  are  hoping  to  see  a  goodly  number  of  our  stores 
in  position  to  start  branch  stores.  I  assure  you  that 
those  who  are  ready  with  men  and  money  will  be 
permitted  and  encouraged  to  go  ahead. 

You  see,  then,  that  our  plans  have  not  changed 
one  iota.  Our  desire  and  determination — to  build 
this  business  to  1,000  stores  doing  an  annual  busi- 
ness of  hundreds  of  millions — is  stronger  today 
than  ever  before.  It  is  true,  we  are  going  through 
a  period  where  the  sledding  is  hard.  We  are  still 
in  the  midst  of  that  period  and  to  say  the  least  it 
tends  toward  discouragement.  But,  men,  the  pendu- 
lum swings  from  one  side  to  the  other.  If  we 
throw  a  ball  up  it  comes  down.  If  we  eat  more 
than  our  share  at  dinner  we  must  expect  to  go  a 
little  short  at  supper  time. 

During  the  period  of  the  war  and  the  year  or 
two  following,  we  enjoyed  an  unusual  degree  of 

22 


prosperity.  Relatively  speaking,  business  came 
easy.  Without  unusual  effort  on  our  part,  we  ac- 
complished the  things  we  were  after.  Now  the 
dam  that  held  the  reservoir  has  broken.  We  find 
ourselves  in  the  stream.  By  concerted  action  we 
must  begin  piling  the  stones  to  rebuild  the  dam  so 
that  we  shall  again  have  power  for  the  degree  of 
momentum  our  purposes  call  for. 

I  believe  that  the  pendulum  has  now  about 
reached  the  extreme  end  of  its  swing.  It  will  soon 
start  back  the  other  way.  Good  times  are  ahead. 
Let  us  capitalize  our  experience  now,  while  the 
going  is  hard,  and  be  ready  for  that  period  of  pros- 
perity that  is  just  as  sure  to  follow  as  day  is  sure  to 
follow  night. 

Prosperous  times  are  ahead  of  us,  men,  that's 
sure.  Let  us  not  be  discouraged.  Let  us  try  to  live 
the  life  of  the  child  who,  when  one  Christmas  has 
passed,  begins  to  look  forward  with  great  anticipa- 
tion to  the  next  and  gets  pleasure  much  more  out 
of  the  anticipation  than  the  realization. 

There  is  another  thing  that  I  want  to  talk  about 
just  for  a  minute  in  connection  with  new  stores, 
and  that  is  the  kind  of  towns  we  select. 

I  have  never  favored  cities.  I  do  not  believe 
that  we  are  organized  to  do  business  in  the  larger 
cities.  I  do  not  believe  that  we,  as  individuals, 
have  been  trained  to  do  business  in  the  larger  cities. 
I  do  not  believe  that,  when  we  get  into  the  larger 
cities,  we  can  train  our  men  properly  to  manage 
the  kind  of  stores  that  we  should  have  there.  The 
medium  sized  towns  are  the  towns  that  have  made 

23 


money  for  us,  and  they  are  the  kind  of  towns  that 
will  continue  to  make  us  successful. 

There  is  another  thing,  men,  to  which  we  must 
give  careful  attention.  It  is  the  fitting  of  square 
pegs  into  square  holes  and  round  pegs  into  round 
holes.  I  mean  by  this  that  one  man,  because  of  his 
peculiar  and  particular  experience,  is  fitted  to  do 
business  in  a  certain  kind  of  a  town,  while  another 
man  with  another  kind  of  experience  is  not.  We 
want  to  weigh  this  thing  well,  because  it  is  to  the 
advantage  not  of  any  one  man  but  of  every  one  con- 
cerned to  weigh  it.  If  my  experience  has  come  to 
me  from  a  small  town,  from  a  community  where  I 
have  been  dealing  with  the  farmers,  I  am  best 
fitted,  when  I  arrive  at  the  point  of  starting  a  new 
store,  to  go  into  that  kind  of  town.  And  the  same 
rule  applies  everywhere.  This  is  a  matter  that 
should  be  given  the  most  careful  consideration,  be- 
cause it  has  a  great  deal  to  do  with  the  progress  and 
success  of  this  Organization. 


?? 


24 


VI. 

Promises  to  a  New  Man 

At  this  point  I  want  to  make  clear,  if  I  can,  just 
what  the  opportunity  is  for  the  young  man  who 
comes  into  this  Organization.  There  has  been 
some  misunderstanding  and  I  suspect  that  we  some- 
times are  to  some  extent  to  blame  for  this  misun- 
derstanding. But  if  there  was  ever  a  promise 
made  to  any  man  who  came  into  this  Organization, 
it  was  made  in  violation  of  the  fundamental  prin- 
ciple of  the  Founder.  No  man  has  ever  been 
promised  anything  definite.  Now  the  opportunity 
that  a  man  has  who  comes  into  one  of  our  stores  is, 
in  as  brief  a  way  as  I  can  put  it,  simply  this :  It  is 
an  opportunity  to  aid  that  branch,  to  which  he  may 
be  assigned,  in  the  making  of  money,  with  the  un- 
derstanding that  the  available  profits  of  the  said 
branch  are  to  be  used  in  the  capitalization  of  an- 
other store  in  which  this  new  man  shall  be  afforded 
an  opportunity  to  demonstrate  his  managerial 
ability  or  to  become  a  stockholder. 

We  have  some  men  in  our  Organization  who, 
for  the  past  year,  have  been  a  little  disturbed  be- 
cause such  and  such  a  thing  has  not  happened.  We 
are  indeed  sorry  that  we  could  not  go  ahead  with 
the  expansion  proposed  a  year  ago.  We  wish  that 
we  could  open  stores  much  faster,  but  we  cannot 
do  the  impossible.  We  offer  to  a  young  man  the 
best  opportunity  that  I  know  of  anywhere  in  the 
United  States ;  but  we  have  got  to  produce,  we  have 
got  to  put  in  before  we  can  take  out. 

I  know  of  a  man  in  our  Organization,  and  the 
chances  are  you  men  know  of  others,  who  says  that 

25 


he  has  not  been  treated  fairly.  I  am  going  to  re- 
late this  man's  experience  in  order  to  illustrate  the 
point  that  I  am  trying  to  make. 

He  came  into  this  Organization  about  four  years 
ago  with  the  same  understanding  with  which  every 
other  young  man  has  entered.  Fie  was  told  that, 
if  he  would  go  to  a  certain  store,  he  would  find 
there  the  opportunity  to  demonstrate  to  us  his 
ability.  We  hoped  he  would  be  able  some  time,  in 
the  not  far  distant  future,  to  manage  that  store  and 
later  to  share  in  the  new  stores  that  would  be 
opened  from  the  profits.  He  went  to  this  par- 
ticular store;  he  worked  at  a  slightly  less  salary 
than  he  might  have  been  able  to  command  else- 
where. His  salary  was  increased  from  time  to 
time  to  an  amount  that,  I  believe,  was  equal  to 
what  he  could  have  earned  anywhere.  In  that 
period  of  a  year  or  so,  he  thought  that  the  Manager 
of  the  store  was  not  treating  him  "just  right,"  was 
not  giving  him  so  much  information  about  the  gen- 
eral operations  of  the  business  as  he  thought  he 
should  receive;  he  felt  that  his  efforts  were  not 
appreciated,  in  short,  that  he  was  not  getting  along 
so  well  as  he  should.    He  asked  to  be  transferred. 

The  Manager  of  the  first  store  said  that  the 
young  man  was  fairly  good  but  that  he,  personally, 
was  not  able  to  get  along  with  the  young  man  be- 
cause he  was  not  putting  into  the  business  what  he 
should.  We  thought  it  might  be  a  case  of  incom- 
patibility; so  a  transfer  was  arranged  and  the 
young  man  was  sent  to  one  of  the  new  stores  where 
another  type  of  man  was  Manager.  This  arrange- 
ment went  on  for  a  couple  of  years  and  the  second 

26 


Manager  did  not  get  along  with  the  new  man. 
But  this  second  Manager  took  a  reasonable  point 
of  view  and  said :  I  will  do  the  best  I  can ;  he  was 
sent  here  to  me  and  probably  our  failure  to  work 
well  together  is  my  fault.  Thus,  it  continued  for 
a  couple  of  years,  and  the  new  man  became  dis- 
satisfied again  and  said  that  he  could  not  get  along 
with  his  Manager. 

To  my  way  of  thinking,  there  is  only  one  way 
to  dispose  of  that  man,  and  that  is,  to  let  him  go. 
He  has  had  two  opportunities  and  in  neither  did 
he  make  good.  But  today  that  man  feels  that  he 
has  been  imposed  upon  by  the  J.  C.  Penney  Com- 
pany. I  claim  that  he  has  not  been  imposed  upon. 
I  claim  that  he  has  had  full  opportunity  to  show 
what  he  could  do,  full  opportunity  to  co-operate 
with  the  manager  of  this  Organization.  I  claim 
that  he  never  put  anything  into  this  Organization, 
and  therefore  he  is  not  entitled  to  take  anything  out. 

Men,  I  want  to  caution  you  to  make  it  clear  to 
every  man  who  comes  into  your  employ  just  what 
kind  of  opportunity  you  have  for  him.  Don't 
promise  him  anything.  Of  course,  you  can  tell 
him  about  the  success  of  others;  it  is  only  fair  and 
right  that  you  should.  Tell  him  that  his  oppor- 
tunity is  the  same  as  any  other  man's,  that  if  he 
comes  to  you  and  helps  you  to  make  money  your 
plan  is  to  reinvest  the  money,  and  that  he  can  share 
in  the  reinvestment. 

Again  I  say,  be  careful  what  you  say  to  your  men. 
Don't  make  promises  to  them,  but  tell  them  plainly 
what  our  plan  is.  Then  there  will  be  less  disap- 
pointment than  there  has  been. 

27 


VII. 
Business  Conditions 

So  much  for  conditions  in  general.  Now  let 
me  take  up  the  matter  of  business  as  it  is  today. 

Business  in  some  localities  is  falling  off.  Con- 
ditions over  which  we  have  no  control  cause  this. 
To  say  the  least,  this  is  not  a  satisfying  situation.  I 
am  sure  there  is  no  Manager  who,  doing  less  busi- 
ness this  year  than  he  did  last  year,  is  satisfied  with 
the  result. 

With  the  falling  off  of  business,  the  first  thing 
we  want  to  think  about  is  operating  expenses.  It 
seems  that,  when  business  is  on  the  increase,  the 
operating  expense  automatically  takes  care  of  it- 
self. As  our  business  gets  bigger  it  seems  that  over- 
head just  comes  along  gradually  with  it.  But  with 
decreased  business,  I  want  to  tell  you,  it  takes  effort 
and  judgment  to  make  a  relative  reduction  in 
operating  expenses. 

I  realize  that  we  are  paying  larger  salaries  than 
we  paid  a  few  years  ago.  I  realize  that  the  Manag- 
ers of  today  have  many  demands  upon  their  time 
that  did  not  obtain  some  years  ago.  You  have  bul- 
letins to  read,  questionnaires  to  answer  and  a  hun- 
dred other  things  to  claim  your  time.  You  Manag- 
ers have  more  to  do  than  ever,  though  in  most  cases 
where  volume  of  business  will  justify  it  you  are 
supplied  with  cashiers  who  in  turn,  with  proper 
supervision,  can  do  much  of  the  detail  that  you 
would  otherwise  be  called  upon  to  do. 

Our  Managers  today  are  bigger  men  than  the 
Managers  of  yesterday,  and  our  Managers  of  to- 

28 


morrow  must  be  still  bigger  men  than  the  Manag- 
ers of  today.  The  older  the  Manager  is  in  experi- 
ence, the  more  easily  he  should  be  able  to  handle 
the  affairs  of  his  store. 

The  point  I  want  to  make  is  that  we  are  now 
going  through  unusual  times,  times  of  business  de- 
pression, and  that  successfully  to  cope  with  times 
like  these  takes  unusual  effort  and  perseverance. 
These  are  times  that  demand  our  undivided  atten- 
tion.   Everyone  of  us  should  be  on  his  job. 

Many  of  our  Managers  have  met  this  situation — 
this  falling  off  of  business — and  have  adjusted  their 
affairs  satisfactorily.  Their  business  is  now  on  a 
money-making  basis.  But  some  of  our  Managers 
have  not  met  the  situation. 

I  know  some  Managers,  and  some  of  you  men 
know  these  same  men,  who,  in  spite  of  the  falling 
off  in  business,  who,  in  spite  of  the  need  of  more 
enthusiasm  in  their  stores,  absent  themselves  fre- 
quently from  their  stores  for  parts  of  days  and 
even  for  a  number  of  days  at  a  time.  It  seems  to 
me  that  this  is  getting  to  be  a  too  common  practice 
among  some  of  our  Managers. 

As  I  said  before,  we  are  going  through  a  period 
of  business  depression.  We  are  in  the  midst  of  a 
period  when  the  best  a  man  has  is  not  enough.  I 
realize  that  we  must  have  a  rest  now  and  then. 
Every  man  needs  a  certain  amount  of  rest.  I  think 
a  vacation  should  be  a  part  of  our  annual  program. 
But  when  we  take  a  vacation,  let  us  go  away  and 
recreate;  and  when  we  come  back,  let  us  go  to  work 
and  stay  on  the  job. 

29 


Managers,  yours  is  a  great  responsibility.  You 
should  take  your  job  seriously.  It  is  up  to  you  not 
just  to  push  this  business  ahead,  but  to  get  up  in 
front  and  pull.  If  you  take  your  job  lightly  and 
can  always  find  time  to  get  away  for  this  reason  and 
that,  then  just  as  surely  as  we  are  living  men,  your 
lack  of  self-discipline  will  show  itself  in  the  lack 
of  discipline  of  your  store  force. 

I  have  noted,  in  looking  over  some  of  the  sales 
reports  of  the  stores,  that  there  are  some  Managers 
who  sell  little  or  no  merchandise.  I  also  notice,  in 
cases  where  the  Manager  sells  little  or  nothing,  that 
his  first  man  usually  sells  very  much  less  than 
others  in  the  store.  I  claim  that  a  Manager,  no 
matter  what  the  volume  of  his  business,  should  sell 
some  merchandise,  and  I  also  claim  that  the  first 
man  should  be  mighty  close  to  the  top  of  the  list  of 
salespeople.  I  realize  that  a  Manager  cannot  al- 
ways top  the  list,  although  we  have  some  who  do  it 
occasionally.  But  I  claim  that  a  man  cannot  buy 
intelligently  for  the  needs  and  requirements  of  his 
patrons,  unless  he  is  down  on  the  floor  meeting  his 
trade  and  selling  merchandise  over  the  counter. 
In  that  way,  he  learns  what  his  customers  want. 

Now,  men,  don't  get  me  wrong.  You  say :  It  is 
easy  for  Sams  to  stand  up  there  and  tell  us  how  to 
do  it.  I  tell  you  again,  that  every  man  should  sell 
some  merchandise.  He  should  be  listed  on  the 
sales  report  and  his  percentage  should  be  figured 
the  same  as  others'. 

Our  game  is  a  game  of  Come  On  and  not  a  game 
of  Go  On. 

30 


I  base  my  contention,  when  I  say  that  a  Manager 
can  and  should  sell  goods,  upon  the  fact  that  most 
of  the  Managers  of  our  bigger  stores  are  doing  so. 
The  Manager  of  our  largest  store  sells  about  $2,000 
worth  of  goods  a  month. 

Men,  to  cut  our  operating  expenses  to  what  they 
must  be,  every  man  must  help.  A  Manager  who  is 
developing  the  other  man  should  delegate  some  of 
the  managerial  duties  to  him  and  many  of  these 
duties  can  be  attended  to  outside  of  regular  busi- 
ness hours.  By  working  in  this  way,  the  Manager 
is  afforded  time  to  lead  his  sales-force,  to  be  down 
on  the  floor,  and  to  radiate  that  selling  enthusiasm 
which  is  indispensable  nowadays. 

There  is  only  one  way  to  cut  operating  expenses, 
and  that  is  to  cut  them.  There  is  just  so  much  that 
has  to  be  done  and  if  you  reduce  your  force  with 
which  you  have  to  do  it,  everybody  left  will  have 
to  do  a  little  bit  more.  Now,  don't  misunderstand 
me.  I  know  that  most  of  you  men  are  doing  every- 
thing that  you  have  power  to  do,  but  there  are  some 
exceptions  to  this,  and  the  exceptions  are  the  ones 
to  whom  I  am  talking. 

Again  I  say,  we  are  in  the  midst  of  a  period 
when  the  best  a  man  has  is  not  enough.  It  is  going 
to  take  extraordinary  effort  to  keep  our  business  up 
to  its  maximum  and  to  maintain  our  profits  where 
we  want  them  to  be.  Are  we  going  to  do  this?  Or 
are  we  going  to  watch  them  slip?  It  is  up  to  us. 
Times  like  these  are  not  times  to  choose  for  visit- 
ing our  neighbors.  More  than  ever  I  urge  you, 
although  some  of  you  do  not  need  this  urging,  to 
stay  with  your  job.     Live  with  it;  go  over  every 

31 


part  of  your  business  carefully  and  often,  as  though 
it  needed  a  doctor;  and  if  it  needs  medicine,  pre- 
scribe for  it. 

Now  is  the  time  for  us  to  make  things  happen. 
We  have  got  to  create  something,  rather  than  to 
follow  what  has  already  been  done. 

I  am  reminded  right  now  of  a  little  story  of  a 
milkman  who  was  preparing  his  milk  on  a  certain 
morning  for  his  customers.  In  order  to  be  sure 
that  his  quantity  was  sufficient,  he  thought  that  he 
would  add  a  little  water  to  each  can  of  milk.  So  he 
took  a  dipper  and  he  went  to  the  spring  nearby  and 
got  a  dipper-full  of  water  which  he  put  into  the 
first  can.  He  went  back  and  got  another  dipper- 
full  of  water  and  poured  it  into  the  other  can.  He 
adjusted  the  tops  of  his  cans  and  went  away.  In 
each  dipper  of  water  that  he  carried  from  the 
spring,  there  was,  though  he  did  not  know  it,  a 
frog.  When  he  poured  the  first  dipper  into  the 
first  can,  one  frog  went  down  to  the  bottom  of  the 
milk  and  came  up  to  the  top  just  as  the  milkman 
was  adjusting  the  top  of  the  can.  The  frog  said 
to  itself :  I  am  surely  going  to  perish,  I  will  never 
get  out  of  this,  I  am  going  to  die. 

The  frog  in  the  other  can  went  down  to  the  bot- 
tom just  as  the  first  frog  had  gone  and  also  came 
to  the  top  about  the  time  the  milkman  was  adjust- 
ing the  top  of  the  can.  But  he  said  to  himself  :  My 
goodness,  I  have  got  to  keep  busy  or  I  am  going  to 
die.  I  have  got  to  get  out  of  here  in  some  way  or 
other. 

32 


In  the  morning  the  milkman  took  the  top  off  the 
first  can  and  everything  was  quiet.  The  poor  frog 
had  fallen  to  the  bottom  and  died.  He  opened  the 
other  can  and  there,  right  in  the  middle,  was  the 
other  frog,  sitting  on  a  little  lump  of  butter  that  he 
had  churned  during  the  night,  feeling  satisfied  that 
he  had  created  for  himself  a  way  out  of  his  pre- 
dicament. 

Gentlemen,  we  must  apply  ourselves  like  frog 
number  two  and  not  play  the  part  of  frog  number 
one.  These  are  times,  as  I  said  before,  when  we 
have  got  to  create  a  way  out  of  any  predicament  in 
which  we  may  find  ourselves. 

Now,  I  have  reviewed  for  you  the  condition  of 
business  that  has  obtained  for  the  last  two  or  three 
years  and  I  have  told  you  what  economic  authori- 
ties agree  is  the  prevailing  business  condition  to- 
day. It  would,  of  course,  be  beneficial  to  us  all,  if 
we  could  know  definitely  in  what  condition  busi- 
ness will  be  for  the  next  few  months  or  for  a  year. 
With  that  knowledge  we  could  trim  our  sails  and 
weather  safely  all  storms  on  the  commercial  sea. 
Unfortunately,  however,  no  man  can  actually  see 
what  the  future  has  in  store.  But  experience  has 
taught  us  to  deduce  from  present  conditions  the 
general  trend  of  the  future.  So  we  may,  by  keep- 
ing clearly  before  us  the  facts  of  business  as  they 
are,  anticipate  somewhat  the  conditions  into  which 
we  are  moving. 

Statistical  organizations  assure  business  men  that 
the  period  of  readjustment  will  be  tedious.    They 

33 


point  out  that  it  is  important  for  us  to  take  advant- 
age of  every  favorable  condition  that  we  can  find 
in  business.  For  the  next  few  months,  we  shall 
have  to  fight  our  way  along,  overcoming  unfavor- 
able trends  by  the  force  of  industry,  optimism  and 
economy. 

What,  then,  are  the  conditions  or  the  facts  to 
which  we  must  give  our  closest  attention? 


'i? 


34 


VIII. 
Business  Cycles 

Business  runs  in  cycles  and  consequently  there  is 
periodically  a  depression,  occasionally  emphasized 
by  a  panic.  Panics  are  always  sudden  and  unex- 
pected. The  recent  and  present  depression  does 
not,  however,  constitute  a  panic.  There  can  be  no 
panic  when  everyone  is  expecting  a  normal  and  in- 
evitable reaction.  What  we  are  now  passing 
through  is  the  normal  and  expected  business  de- 
pression, following  the  long  period  of  prosperity 
due  to  the  war.  We  have  seen  some  decline  in 
commodity  prices  followed,  as  the  economic  law 
specifies,  by  employment  unrest,  which  is  the  em- 
ployees' side  of  it,  and  by  the  slowing  up  of  produc- 
tion which  is  the  employers'  way  of  manifesting 
the  depression  period. 

Periods  of  depression,  economists  tell  us  again, 
move  in  cycles.  These  cycles  succeed  one  another 
in  the  order  shown  in  the  diagram  on  page  36. 

1.  The  cycle  of  maximum  prosperity  which  con- 
stitutes a  period  of  large  profits  and  wages.  This 
period  was  evident  during  the  war  when  every- 
one had  an  abundance  of  money  which  many  spent 
freely  and  even  thoughtlessly. 

2.  The  habits  contracted  during  the  first  cycle 
lead  to  the  characteristic  feature  of  the  second  cycle 
which  is  general  inefficiency,  for  careless  spending 
is  the  result  of  careless  thinking.  This  cycle 
is  characterized  by  declining  bond  prices  due  to 

35 


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Babson's     Statistical 
Organization 


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increasing  commodity  prices.  The  surplus  sav- 
ings, which  ordinarily  would  be  or  might  be  placed 
in  bond  investments,  are  necessary  to  pay  expenses 
incurred  at  the  high  commodity  prices.  Hence 
bond  investors  seek  so  high  a  yield  for  their  funds 
that  bond  prices  are  depressed  in  proportion  to 
commodity  prices. 

3.  Cycle  three  is  the  period  of  declining  stock 
prices  and  lower  commodity  prices.    These  bring 


36 


in  their  wake  what  economists  classify  as  dis- 
honesty— a  tendency  to  cancel  contracts  for  goods, 
resulting  in  business  stagnation. 

4.  This  brings  in  cycle  four  in  which  commodity 
prices  further  decline,  and  which  is  often  charac- 
terized by  an  increase  in  crime.  This  always  fol- 
lows when  people,  who  have  been  accustomed  to 
high  wages  and  plenty  of  money,  find  themselves 
denied  the  luxuries  to  which  they  have  begun  to 
accustom  themselves. 

5.  In  the  fifth  cycle  unemployment  is  general. 
Hesitation  and  fear  tend  to  stop  all  expansion  and 
materially  to  lessen  production. 

6.  In  the  sixth  cycle  men  find  it  necessary  to 
move  from  place  to  place  in  search  of  work.  This 
breaks  up  the  home  and  brings  in  a  period  of  real 
estate  depression. 

Let  me  stop  here  and  point  out  that  our  present 
business  condition  seems  to  lie  between  cycles  five 
and  six  but  the  hopefulness  of  the  situation  is  that 
we  are  moving  forward  to  the  seventh  cycle,  which 
is  the  first  of  a  group  of  conservative  cycles. 

There  lie  before  us  then,  as  evidences  of  com- 
mercial readjustment,  these  factors : 

1.  Lower  Money  Rates. 

2.  Increasing  Bond  Prices. 

3.  Increasing  Stock  Prices. 

4.  Increasing  Commodity  Prices. 

5.  Full  Labor  Employment. 

6.  Increasing  Money  Rates. 

37 


43<  )221 


Accompanying  every  one  of  these  commercial 
readjustment  factors  is  its  associate  moral  or 
Golden  Rule  factor: 

1.  Increasing  Thrift. 

2.  Greater  Efficiency. 

3.  Honesty  and  Fair  Prices. 

4.  Religious  Interest  or  Increased  Philan- 
thropic and  Beneficient  Movements. 

5.  Broader  Social  Activities. 

6.  Normal  and  Healthy  Prosperity. 


*« 


38 


IX. 

Waste 

It  is  not  beneath  our  dignity  to  adopt  the  prac- 
tice of  any  economy  that  will  contribute  its  mite  to 
our  general  well-being.  We  must  never  get  away 
from  the  conviction  that  waste,  even  in  small  things, 
is  a  business  leak,  and  that  a  lot  of  waste  means  a 
lot  of  business  leaks  which  in  turn  may  sink  the 
ship. 

You  know  it  used  to  be  the  custom,  when  I  first 
went  to  Kemmerer,  to  save  and  use  again  every 
little  piece  of  wrapping  paper,  every  small  piece 
of  twine.  There  was  absolutely  no  waste  permit- 
ted. I  am  wondering  if  we  are  practicing  such 
thrift  today.  It  is  not  so  much  the  value  of  the 
things  that  are  saved  in  this  way  as  it  is  the  dis- 
cipline and  training  that  you  give  yourself  and 
your  associates  in  eliminating  every  possible  source 
of  leaks  and  waste. 

We  must  not  waste  anything,  not  even  our  time. 
Some  of  us  waste  our  time  in  ways  that  we  do  not 
think  about — many  of  us  with  idle  talk. 

Men,  experience  has  taught  me  that  a  successful 
man  has  two  simple  but  important  characteristics: 
One  is  Vision  which  shows  him  the  goal  and  the 
way;  the  other  is  the  homely  practice  of  faithfully 
and  thoroughly  doing  the  job  in  hand. 

There  will  come  to  every  one  of  us  the  gossiping 
message  of  Rumor.  It  is  forever  in  the  air.  It 
tricks  us  into  the  habits  of  forming,  perhaps  un- 

39 


consciously,  impressions  of  other  men,  and  worse 
than  that,  of  acting  upon  these  impressions.  I 
thoroughly  believe  that  at  heart  all  men  are  honest. 
I  believe  that  the  average  man  whom  we  meet  in 
daily  intercourse  would  rather  act  honestly  than 
otherwise.  But  we  all  make  mistakes  if  we  make 
anything,  and  we  would  best  assume  a  man's 
honesty  when  he  does  make  a  mistake  and  tell  him 
about  it,  rather  than  the  other  fellow. 

It  is,  moreover,  a  good  rule  if  a  man  does  well 
to  tell  him  of  that,  in  appreciation.  Tell  the  other 
man  also,  for  all  three  people  will  feel  the  influence 
of  the  boost  and  the  praise.  Such  a  practice  stimu- 
lates and  strengthens  confidence  among  men  and 
so  in  turn  strengthens  our  Organization. 

Here,  I  believe,  we  find  the  essential  factor  of 
our  business  conduct :  To  help  one  another  in  such 
a  way  that  not  only  we  individually  are  helped  but 
our  Organization  benefits  at  the  same  time. 

Much  is  being  said  by  writers  these  days  about 
business  ethics,  about  our  way  of  living  outside  of 
business  for  proper  atmosphere  in  business.  I  be- 
lieve that  a  real  man  lives  one  life,  not  two  lives. 
And  in  conjunction  with  what  I  have  said  above 
concerning  the  harm  of  trusting  Rumor,  and  con- 
cerning the  benefits  of  bestowing  praise  freely,  let 
me  add  that  I  think  the  whole  man  must  go  into 
business  and  business  must  receive  from  him  all 
that  he  has  to  give.  When  a  man  withholds  any 
part  of  himself  (his  ethics,  morals,  religion,  in- 
dustry, confidence,  judgment)   from  his  business, 

40 


his  business  suffers  in  just  the  proportion  that  he 
fails  to  apply  these  factors. 

Therefore,  I  urge  a  high  standard  of  life  and  liv- 
ing for  home,  community  and  business,  not  merely 
because  this  is  a  benefit  to  business  itself,  but  be- 
cause it  is  also  a  benefit  to  the  man  who,  later  in 
life,  must  necessarily  look  back  on  his  career  and 
ask  himself  if  what  he  has  done  has  been  worth 
while.  Men,  for  two  good  reasons,  I  want  to  urge 
upon  you  worth  while  living.  It  gets  the  most 
out  of  and  puts  the  most  into  every  day's  work,  and 
it  creates  a  type  of  life  which  will  give  you  joy  as 
you  retrospect  it  in  later  days. 


^ 


41 


X. 

Economy  of  Overhead 

I  am  going  to  make  some  pretty  broad  assertions 
and  I  ask  that  you  follow  me  closely. 

No  man  operates  a  business  with  complete  suc- 
cess who  has  not  learned  to  conduct  his  individual 
expenses  with  wise  economy.  Therefore,  when  a 
man  enters  our  employ,  he  should  begin,  if  he  has 
not  already  done  so,  to  exercise  watchful  care  over 
his  personal  finances.  The  home  allows  a  man  one 
of  the  best  training  grounds  for  the  practice  of 
business  principles.  Here  he  may  study  the  budget 
system,  distribution  of  income,  control  of  expendi- 
ture, overhead,  up-keep  of  property,  insurance, 
the  building  of  surplus.  In  fact,  most  of  the  funda- 
mental problems  of  business  are  found  in  the  home 
and  may  be  practised  and  mastered  there. 

This  mastery  of  home  economics  is  a  splendid  in- 
troduction to  business  economics.  No  man  is  pre- 
pared to  manage  one  of  our  stores  until  he  has 
learned  to  get  the  utmost  value  for  every  dollar  of 
his  expenditure,  to  live  within  his  means,  to  save 
systematically — in  short,  to  make  a  true  business 
distribution  of  his  resources.  And  with  increase 
of  income,  there  should  never  be  a  like  increase  of 
expenditure  but  necessarily  there  should  be  a 
greater  increase  of  savings. 

The  practice  of  keeping  close  scrutiny  over  per- 
sonal and  domestic  expense  is  the  best  preparation 
a  man  can  have  for  the  economic  conduct  of  busi- 
ness. After  all,  is  it  not  true  that  business  economy 
is,  in  a  sense,  personal  economy  amplified?    In  both 

42 


applications  of  economic  efficiency  a  man  must 
spend  less  than  he  earns,  to  waste  nothing,  get  the 
greatest  value  out  of  everything,  buy  wisely,  use 
and  not  abuse  physical  properties,  and  build  a  sur- 
plus as  a  means  of  power  for  future  opportunity. 

It  is  surprising  to  what  a  wide  extent  the  simple 
virtues  of  economic  living  apply  in  business.  I 
cannot  but  recall  to  you  the  homely  economy  and 
saving  as  practised  by  the  early  settlers  of  our  coun- 
try. They  found  it  worth  while  to  set  aside  even 
such  small  sums  as  twenty-five  or  fifty  dollars  a 
year,  and  with  these  to  lay  the  foundation  of  family 
betterment.  That  means  improvement  of  living 
conditions,  the  building  of  a  home,  the  establish- 
ment of  a  fund  for  the  education  of  sons  and 
daughters.  Too  many  men  in  the  scramble  for 
wealth  are  poor  judges  of  values. 

To  handle  a  business  wisely,  then,  a  man  should 
know  into  what  values  to  translate  money.  He 
ought  to  know  what  money  means  in  terms  of  do- 
mestic and  business  operations  and  equipment. 
When  a  man  has  learned  how  to  manage  his  private 
affairs  and  is  careful  and  studious  to  improve  and 
govern  wisely  his  personal  spending,  he  may 
gradually  be  trusted  to  handle  the  funds  of  the 
business  he  represents. 

But  there  is  another  phase  of  the  money  question 
that  I  must  not  fail  to  bring  to  your  attention.  It 
is  this :  In  our  business  we  regard  money  as  a  by- 
product. Now  don't  misunderstand  me — we  are 
in  business  to  make  money;  we  would  not  continue 
a  store  unless  it  was  a  profit  maker.  But  money 
is  not,  and  never  can  be,  the  one  principal  object  of 

43 


our  business.  We  place  the  greatest  stress  and  give 
the  foremost  place  to  the  training  of  men  and  the 
giving  of  service.  This  you  see  is  the  business  in- 
surance of  producing  producers.  Once  a  business 
is  wise  enough  to  do  that,  the  financial  income  is 
assured.  This  makes  clear  what  the  essential  duty 
of  the  Manager  is:  He  becomes  a  Manager  not 
alone  because  he  gives  evidence  that  we  can  trust 
him  to  conduct  the  affairs  of  one  of  our  stores  but 
beyond  that,  because  he  has  proved  to  us  that  he 
can  build  another  man  to  take  his  place.  He  must 
train  that  man  in  every  essential  of  this  business  and 
make  that  man  in  turn  a  capable  teacher  of  another 
man.  This  is  the  true  J.  C.  Penney  Company  end- 
less chain — the  training  of  men  down  the  line 
which  makes  every  new  man  as  capable  as  his 
trainer  in  the  ability  to  handle  the  business  and 
to  become  the  teacher  of  the  men  beside  him. 

This  should  make  it  plain  to  you  why  I  say  that 
money  is  not  the  prime  factor.  Once  you  grasp  the 
significance  of  the  highly  developed  executive 
capable  of  training  the  man  beside  him,  you  will 
comprehend  the  relative  places  of  man  and  money 
in  our  enterprise. 

I  am  going  to  say  something  to  you  about  your 
conduct  as  individuals.  I  am  going  to  be  very 
frank,  because  I  believe  we  should  be  frank  with 
one  another  for  thus  it  is  that  we  arrive  the  sooner 
at  an  understanding. 

Gentlemen,  I  have  not  come  here  with  the  in- 
tention of  preaching  to  you.  I  am  sure  I  do  not 
even  need  to  disclaim  any  such  intention.  But  I 
want  every  word  of  this  message  to  reach  you,  to 

44 


reach  every  one  of  you  individually.  Furthermore, 
T  do  not  want  you  to  receive  it  as  a  message  for  the 
other  man  but  as  the  most  pertinent  of  all  messages 
for  yourselves. 

In  our  Organization  there  has  developed,  to  a 
greater  or  less  degree,  a  tendency  toward  careless 
methods  of  individual  finances.  In  many  instances, 
I  think,  this  careless  financing  expresses  itself  in 
extravagant  ways  of  individual  and  family  living. 
I  deplore  this  because,  as  I  have  already  said  to 
you,  no  man  becomes  a  business  success  who  is  not 
already  familiar  with  economic  practices  learned 
from  and  applied  to  the  family  budget.  Let  me 
quote  you  a  few  words  of  Charles  Schwab : 

The  supreme  virtue  of  the  existing  situation  is 
that  it  is  necessary  for  all  business  men  in  America, 
in  fact  for  every  individual  in  America,  to  examine 
thoroughly  his  cost  of  doing  business  and  his  cost 
of  living.  The  result  of  it  all  is  to  force  business  and 
to  force  individuals  to  start  to  economize  and  to 
save. 

Men,  are  you  doing  this?  Are  you  economiz- 
ing? Are  you  saving?  Are  you  building  that 
reasonable  but  necessary  surplus  for  the  future? 
As  I  have  told  you,  business  has  its  cycle  of  lean 
and  fat  years,  now  as  truly  as  in  the  Old  Testament 
days. 

No  one  can  afford  to  go  on  blindly,  exercising 
the  habits  that  were  formed  during  the  Happy-Go- 
Lucky  days  of  a  year  or  so  ago.  The  good  old 
easy  times  of  1919  are  gone  forever.  No  man  here 
will  ever  again  experience  them,  for  they  do  not 

45 


come  twice  in  a  generation.    Often  several  genera- 
tions pass  and  never  know  them  at  all. 

There  will  come,  of  course,  greater  business 
volume;  this  increase  in  volume  will  be  accom- 
panied by  intense  competition.  We  shall  have 
less  and  less  of  the  usual  "waiting  on  the  customer," 
and  more  and  more  necessity  for  keen  service,  for 
constructive,  suggestive,  creative  selling.  Compe- 
tition from  now  on  is  either  going  to  build  a  man 
into  a  finer  and  more  skillful  salesman  or  is  going 
to  thrust  him  aside. 

These  present  conditions  lead  me  to  say  to  you 
something  that  you  must  take  just  as  much  for  your- 
selves as  your  own  case  makes  necessary.  I  am 
not  talking  about  individuals  but  about  the  methods 
which  individuals  adopt,  often  unconsciously,  in 
good  times  and  to  which  they  cling  when  times 
are  more  strenuous.  Here  is  what  I  allude  to: 
Automobiles  are  a  fine  possession;  long  fishing 
trips  in  the  country  are  a  fine  form  of  entertain- 
ment; fine  houses  with  elaborate  equipment  and 
servants  like  those  of  Mr.  Jones  and  Mr.  Smith  are 
wonderfully  impressive  to  poorer  neighbors; 
diamond  rings  and  tailor-made  clothes  are  fine; 
and  so,  too,  are  silk  shirts  and  ten  dollar  hats. 

But: 

Can  we  really  afford  these  things? 

If  we  have  formed  a  habit  of  spending  for  such 
things,  must  we  therefore  keep  it  up? 

Must  we  be  so  foolish  as  to  make  our  demands 
so  great  that  they  require  not  only  our  current  in- 
come but  the  anticipation  of  future  profits? 

46 


Any  man  who  spends  in  excess  of  his  income  and 
borrows  from  his  future  is,  in  no  sense,  a  wise  man 
and  in  many  senses  a  foolish  man. 

I  am  saying  to  that  man  now,  if  he  is  sitting  here : 

Wake  up.  Be  sane  enough  and  brave  enough  to 
look  your  affairs  straight  in  the  face.  Square  your 
needs  with  what  you  have,  and  manage  to  have  a 
little  margin  over  current  income  at  the  end  of  the 
month. 

There  is  just  one  end  for  the  man  who  habitually 
overspends.  Maybe  you  know  him?  His  end  can 
no  more  be  avoided  than  can  death  be  avoided  by 
the  man  whose  boat  drifts  nearer  and  nearer 
Niagara. 

1.  Get  acquainted  with  the  homely  virtues. 

2.  Whatever  your  income  is,  live  within  it. 

3.  Don't  be  ashamed  if  your  surplus  over  ex- 
penses is  small. 

4.  Have  a  definite  goal  for  the  future  of  your 
financial  operations. 

5.  It  is  impossible  for  the  big  salaried  man  to  be 
rich,  if  he  spends  more  than  he  earns. 

6.  It  is  impossible  for  the  small  salaried  man  to 
be  poor,  if  he  spends  less  than  he  earns. 

These  simple  truths  about  money  have  been 
stated  time  and  time  again.  They  are  just  as  true 
today  for  you  and  for  me,  as  they  ever  were;  and 
more  than  that,  they  are  indispensable. 

47 


XL 

Community  Study 

I  want  to  call  your  attention  to  a  factor  which 
must  continue  to  play  a  large  part  in  the  conduct- 
ing of  our  individual  stores.  I  refer  to  the  inten- 
sive scientific  study  of  the  purchasing  capacity  of 
the  towns  in  which  our  stores  are  located.  It  is  of 
no  particular  benefit  to  us  to  open  a  group  of  new 
stores,  if  we  are  securing  from  the  communities  in 
which  our  present  stores  are  located  less  than  the 
fair  proportion  of  business  that  should  be  ours.  I 
particularly  urge  upon  you  to  devote  careful  and 
scientific  thought  to  the  study  of  your  towns.  Every 
Manager  should  know  the  total  payroll  of  his  com- 
munity. This  should  include  the  town  itself  and 
its  adjacent  purchasing  territory.  He  should  know, 
as  closely  as  possible,  the  proportion  of  the  town's 
money  that  is  spent  in  our  kind  of  stores.  He 
should  determine  from  this  total  the  proportion 
that  should  necessarily  fall  to  us;  and  then  he 
should  go  after  a  good  share  of  the  balance,  as  it  is 
right  and  fair  for  him  to  do  because  he  offers  his 
community  unusual  values,  quality  and  service. 

I  regard  this  analysis  of  the  community  as  of 
highest  importance,  for  it  means  on  the  Manager's 
part  close  observation,  accurate  study  and  careful 
planning  to  bring  to  the  store  an  increasing  pro- 
portion of  the  total  possible  business  in  our  line.  I 
earnestly  urge  this  study  upon  our  Managers.  A 
Manager  must  necessarily  study  his  trade.  He 
must  know  the  kinds  of  customers  that  come  to  his 
store,  the  nature  of  their  wants,  the  scope  of  their 
buying.      Without  this    intimate    knowledge,    he 

48 


cannot  buy  intelligently.  In  short,  the  Manager 
must  know  how  to  distinguish  between  what  he 
alone  can  do  for  the  up-building  of  his  store  and 
what  he  can  hire  done;  if  he  himself  never  does 
anything  but  what  he  can  hire  another  man  to  do, 
he  is  failing  in  the  essential  qualifications  of  a 
Manager. 

It  will  pay  you  Managers  constantly  to  study  the 
territory  in  which  our  stores  are  located  and  to 
create  ways  and  means  of  interesting  the  entire 
purchasing  public  in  what  you  offer.  Here  is  a 
campaign  of  education  upon  which  the  Manager 
can  afford  to  spend  some  time.  It  means  bringing 
before  the  public  all  salient  facts  regarding  the 
Company — its  Golden  Rule  policy  toward  the  cus- 
tomer, its  quality  of  goods,  its  enormous  purchas- 
ing power,  its  purchasing  advantages  over  compe- 
titors, and  its  consequent  favorable  prices.  An  ac- 
tive campaign  on  a  Manager's  part,  constantly 
pursued,  will  increase  his  proportion  of  the  total 
business  of  the  town  and  will  repay  many  fold  his 
time  spent  in  constructive  study. 


•i? 


49 


XII. 
Maximum  Returns  to  the  Store  from  the  Town 

What  I  have  just  said  indicates  how  to  bring  to 
the  store  the  maximum  return  from  the  public. 

There  is  a  vast  difference  between  giving  good 
service  to  the  customers  who  voluntarily  enter  our 
stores  and,  on  the  other  hand,  working  out  policies 
that  induce  more  and  more  customers  to  enter  our 
stores.  I  need  not  tell  you,  in  detail,  what  to  do  in 
all  of  our  313  towns  to  bring  this  about,  for  I  have 
already  sketched  in  a  general  way  the  lines  of  ac- 
tivity necessary  for  you  to  investigate  and  operate. 
In  view  of  our  large  buying  power,  our  financial 
standing,  the  unparalleled  work  of  our  buying  de- 
partment, the  quality  of  goods  we  handle  and  the 
service  we  render  to  the  public,  there  is  every 
reason  why  our  Managers  can  spend  time  profit- 
ably in  spreading  the  facts  as  propaganda  in  their 
territory.  The  result  will  be  an  increasing  number 
of  permanent  customers  who  will  give  us  their  con- 
tinued patronage. 

Make  it  a  part  of  your  advertising  campaign  to 
tell  tactfully  the  salient  facts  of  our  business  in 
such  a  way  that  customers  believe  it  to  be  to  their 
best  interest  to  buy  from  us.  This  means  that  you 
convince  them  of  our  superiority  of  service,  re- 
liability of  merchandise,  fairness  and  economy  of 
price,  unfailing  courtesy  and  helpfulness  in 
purchasing.  Aim  to  increase  the  number  of  people 
who  visit  our  stores ;  improve  the  service  you  give ; 
or,  finally,  take  all  steps  to  the  end  that  we  shall 
increase  constantly  the  number  of  our  satisfied  and 
permanent  patrons. 

50 


XIII. 
The  Manager's  Need  of  Education 

Our  Company  has,  at  great  expense,  established 
an  Educational  Department.  The  purpose  of  this 
department  is,  primarily,  to  offer  every  associate 
in  our  Company  systematic  business  training  in 
Salesmanship,  Merchandise,  Nature  and  Manu- 
facture of  Raw  Materials,  and  Merchandising.  It 
is  our  desire  that  nothing  be  left  undone  that  can 
make  our  working  force  a  body  of  highly  qualified, 
superior  and  capable  men.  We  look  to  our  Manag- 
ers to  make  the  most  of  this  educational  work  for 
it  is  part  of  our  plan,  later  on,  to  add  to  our  present 
Business  Training  Course  another  series  of  Les- 
sons for  Managers  alone.  We  are  planning  to  do 
this,  because  we  know  that  ultimately  it  rests  with 
the  Manager  to  train  and  develop  the  working 
force  he  gathers  about  him. 

While  the  Lessons  prepared  by  the  Educational 
Department  bring  before  the  associates  of  the  Com- 
pany the  fundamentals  of  business,  it  must  be  re- 
membered that  we  must  depend  upon  our  Manag- 
ers to  speak  the  personal  and  authoritative  word,  to 
give  the  personal  lift,  to  lend  the  helpful  hand 
wherever  necessary. 

The  Manager  must  be  the  leader  both  in  knowl- 
edge and  experience.  For  that  reason,  we  deem  it 
necessary  that  he  should  be  provided  with  special 
business  material  which  will  analyze  and  lay 
clearly  before  him  his  particular  and  peculiar 
problems. 

We  must  leave  it  to  the  Manager  to  detect  the 
more  highly  qualified  among  his  force,   and  to 

51 


observe  who  has  the  proper  initiative,  the  skill  and 
talent  that  will  grow  into  salesmanship  power.  We 
look  to  our  Managers  to  develop  these  better  types 
of  salesmen  in  accordance  with  their  talent  and 
to  carry  them  forward,  thoroughly  prepared  for 
positions  of  responsibility,  as  the  Managers  them- 
selves were  once  carried  forward.  You  see,  there- 
fore, that  our  Business  Training  Course  plows  the 
ground,  and,  in  a  measure,  shows  us  how  to  cul- 
tivate it;  but  it  is  the  Manager's  duty  to  plant  the 
ground  and  to  make  the  most  of  those  sturdy 
growths  which  he  finds  in  the  garden. 


*8? 


52 


XIV. 

Man  Training  and  Its  Purpose 

It  is  a  characteristic  of  our  business  that  no  man 
may  succeed  in  it  who  does  not,  at  the  same  time, 
win  success  for  others.  It  is  a  wise  provision  that 
our  Managers  must  train  their  successors.  In  the 
beginning  of  our  business,  the  personal  training  of 
men  by  the  Founder  and  the  first  Managers  was  in- 
tensive. We  were  a  small  Company.  We  were 
compact.  We  were  direct  in  our  operations.  We 
did  in  those  days  substantially  the  same  kind  of 
business  we  are  doing  today,  but  the  work  we 
did  in  our  first  stores  was  intensive.  Every 
Manager  gave  to  every  man  under  him  the  freest, 
most  complete  and  most  severe  training  in  the 
essentials  of  merchandising.  We  learned  at  first 
hand  exactly  how  to  carry  out  every  phase  of  the 
business,  because  we  worked  hand  in  hand,  every 
man  making  the  WHOLE  business  his  personal 
inspiration. 

There  has  been  expressed  of  late  the  fear  that, 
with  the  growth  of  the  Organization  and  the  con- 
sequent increases  in  the  number  of  stores,  there  may 
eventually  be  a  weakening  in  our  proper  grasp  of 
the  original  body  of  doctrine.  It  has  been  pointed 
out  that  the  first  Managers  trained  their  men  more 
directly,  intensively,  forcefully  and  completely, 
than  Managers  are  training  their  men  today.  I 
think  this  need  not  be  so.  There  is  no  reason  why 
the  original  body  of  doctrine  should  not  be  passed 
on  just  as  purposefully  today  as  it  was  passed  from 
the  Mother  Store  nineteen  years  ago.  But  I  will 
go  so  far  as  to  say  to  you  that,  in  the  early  days, 

53 


every  Manager  (and  in  fact  every  man  connected 
with  our  business)  studied  the  fundamental  prin- 
ciples of  the  business  in  such  a  complete  and  in- 
tensive way  that  he  mastered  every  problem  that 
came  before  him.  We  knew  in  the  early  days  that 
our  future  depended  on  us.  There  was  no  one  to 
do  our  work  for  us ;  we  simply  had  to  succeed.  And 
I  pass  this  on  to  you  as  being  just  as  true  for  you 
now  as  it  was  for  us  then.  Your  future  depends 
upon  your  own  efforts;  you  must  work  out  your 
problems  and  master  them;  and,  according  to  your 
efforts,  you  must  look  for  success.  No  one  can  do 
this  for  you. 

Now  about  the  reward  for  all  this  intensive  work 
on  your  part.  I  am  convinced  that  our  method  of 
training  men  and  of  doing  business  comes  as  near 
as  is  humanly  possible  to  a  fair  equitable  distribu- 
tion of  financial  profits.  The  conditions  surround- 
ing any  one  man  must  necessarily  be  different  from 
those  surrounding  any  other  human  being.  The 
consequence  is  that  no  man  can  allow  himself  to 
look  upon  another  man's  domain  and  to  be  inspired 
by  covetousness  or  jealousy.  The  main  fact  for 
every  one  of  us  to  cling  to  is  this :  Every  one  of  us 
must  stay  on  his  job.  The  other  man's  job  is  the 
other  man's  responsibility.  Our  job  is  our  re- 
sponsibility. Once  a  man  gets  the  justice  of  this 
fact  fixed  in  his  mind,  he  will  begin  to  find  pleasure 
and  delight  in  his  work.  He  will  understand  that 
the  desire  to  retire  is  illogical,  for  he  will  be  con- 
vinced that  no  morning  is  so  full  of  joy  as  that  one, 
when  a  man  can  say  to  himself ; 

Well,  I  must  be  my  fittest  today  for  I  have  a 
man's  work  to  do.    I  am  eager  to  get  at  it  and  I  am 

54 


going  to  find  happiness  in  every  task  to  which  I 
put  my  hands. 

Compare  this  man  and  the  joy  of  his  active  life 
with  him  who  arises  in  the  morning  and  asks  him- 
self: 

How  can  I  put  in  the  day?  How  can  I  kill  time 
until  bedtime  again? 

This,  to  my  mind,  is  the  most  pitiful  type  of 
citizen — the  man  with  nothing  to  do — who  every 
morning  wonders  how  he  will  murder  God's  most 
precious  gift  to  man,  namely,  "the  golden  hours  of 
the  day." 

Therefore,  friends,  let  us  have  faith  in  this  great 
Organization,  in  its  aims,  purposes  and  service. 
Let  us  have  faith  in  one  another  and  believe  that 
no  day  is  so  happy,  no  day  so  well  spent,  as  that  in 
which  a  man  exercises  his  thought  and  his  strength 
in  building  something  for  public  good  and  public 
service. 

As  to  our  future — if  we  are  able  to  carry  for- 
ward this  business  at  its  present  rate  of  develop- 
ment and  to  win  the  increased  growth  that  it  is  fair 
to  expect,  we  must  realize  that  much  more  will  be 
demanded  of  us  in  the  years  to  come  than  was  ever 
demanded  before.  While  the  Directors  of  this 
Company  will  at  all  times  faithfully  engage  them- 
selves in  shaping  constructive  policies  for  our  con- 
tinued development,  they  depend  upon  the  Manag- 
ers entirely  to  see  to  it  that  these  policies  are  put 
into  operation;  for  it  is  only  by  applying  (in  the 
actual  daily  transactions  in  our  store)  our  con- 
structive policies  that  they  come  to  their  fruition. 

55 


It  is  true  that  we  have  an  exceptional  Organiza- 
tion, that  our  buying  power  is  great  and  that  our 
advantages  in  the  market  are  many;  but  I  want 
to  counsel  you  and  to  warn  you  to  be  ever  on  the 
lookout  for  increasing  competition.  As  we  go  into 
the  future,  competition  is  bound  to  be  more  and 
more  keen.  The  past  does  not  promise  that  the 
path  ahead  is  to  be  easy  and  rosy.  Because  that  is 
true,  we  need  men  of  brains  who  can  think  clearly, 
who  can  see  ahead,  who  can  meet  situations  and 
emergencies  such  as  we  have  never  before  experi- 
enced. 

Managers,  are  you  doing  everything  in  your 
power  to  train  the  big  men  we  must  have?  Are 
you  doing  all  that  you  know  how  to  do  to  fit  your- 
selves to  be  the  men  who  can  be  trusted  to  enlarge 
and  protect  this  business? 

As  I  look  into  the  future  and  perceive  the  de- 
mand that  will  be  made  upon  us  by  our  developing 
business,  I  am  impressed  with  the  fact  that  men  of 
the  average  type  will  not  be  big  enough  to  carry 
the  burdens  that  are  coming  to  us.  Men,  if  you 
stop  growing,  if  you  cannot  increase  yourselves 
mentally  by  study  and  wise  counsel,  if  you  must 
get  soft  and  flabby  because  you  are  receiving  a  fair 
income  for  your  participation  in  our  business,  you 
are  soon  going  to  be  found  wanting  in  skill  and 
judgment  to  carry  this  great  enterprise  into  the 
future. 

I  cannot  impress  upon  you  too  seriously  the 
reality  of  this  picture.  The  untrained  man  of  to- 
day is  unfit  for  the  responsibilities  of  tomorrow. 
And,  as  someone  has  said :    The  half -trained  man 

56 


is  even  a  greater  tragedy  than  the  untrained.  I  see 
no  way  of  our  keeping  abreast  of  our  growing  de- 
mands save  to  hold  ever  before  ourselves  the 
simple  practices  of  the  Founder  of  this  business  and 
of  other  successful  enterprises.  The  simple  facts 
are  these: 

A  man  must  work  his  environment  to  the  advant- 
age of  himself  and  of  his  business  operations. 

He  must  remain  true,  fair  and  just  in  all  he  does. 

He  must  be  a  maker  and  developer  of  men,  the 
rarest  factor  in  every  big  corporation  today. 

You  Managers  must  pass  on  to  the  men  who  are 
working  with  you  the  simple  and  homely  virtues 
that  have  ever  been  operative  in  successful  enter- 
prises. 

Among  other  things,  you  Managers  must  pass 
on  to  our  newer  men  the  significant  fact  which  ex- 
presses the  difference  between  our  business  and 
practically  every  other  of  like  size.  That  fact  is 
-that  we  do  not  dictate  to  our  men  but,  by  placing 
responsibility  upon  them,  we  allow  them  to  de- 
velop. 

This  brings  to  light  another  fact,  namely,  that 
we  judge  a  Manager  not  alone  by  the  business  he 
produces  but  by  the  men  he  produces.  We  value 
him  as  he  gives  evidence  of  power  to  judge  wisely, 
whether  his  judgment  be  exercised  upon  merchan- 
dise, upon  men  or  upon  business  development. 

Sometimes  it  happens  in  our  stores  that  a  new 
man  comes  in  who  has  had  considerable  experi- 
ence.     Usually   his   business    experience,  though 

57 


good  enough  in  itself,  is  not  of  a  kind  that  can  es- 
tablish a  policy  for  our  stores.  Such  a  man  may 
be  a  good  salesman,  he  may  have  the  ability  to  sell 
his  idea  of  business  to  his  own  Manager,  he  may 
even  be  strong  enough  to  tempt  the  Manager  to  de- 
sert the  policy  that  he  has  learned  from  us  and  to 
take  up  the  policies  of  the  man  he  has  just  hired. 

Let  me  warn  you  against  this  situation. 

The  policies  of  our  business  have  been  forged 
on  the  strong  anvil  of  experience.  They  have  been 
wisely  welded.  We  have  given  them  nearly  twenty 
years  of  the  most  careful  consideration  and  close 
scrutiny.  We  know  that  they  tend  in  the  right  di- 
rection. We  know  that  they  cannot  be  overthrown 
in  a  moment  by  the  point  of  view  of  a  new  man. 

Therefore,  Managers,  be  strong  defenders  of  the 
faith;  keep  pure  the  body  of  doctrine  you  have 
learned;  and  by  wise  counsel,  kindly  help  and  con- 
stant examples,  show  your  new  men  that  our  poli- 
cies have  been  carefully  thought  out. 


^ 


58 


XV. 

Conclusion 

I  have  every  confidence  in  the  world  that  you 
will  take  all  that  I  have  said  as  an  open  and  frank 
expression  about  matters  that  merit  our  mutual  in- 
terest. I  have  talked  to  you  not  about  thinges  that 
concern  me  personally,  nor  that  concern  the  Di- 
rectors of  this  Company,  but  about  things  that  con- 
cern us  all.  Therefore,  you  must  receive  all  I  have 
said  to  you  not  as  indicating,  on  my  part,  any  lack 
of  confidence  in  you  but  as  the  very  sign  and  symbol 
of  my  confidence.  Sometimes  our  men,  particu- 
larly new  men,  get  a  wrong  idea  of  what  consti- 
tutes our  Organization.  Boys,  let  me  tell  you  a 
very  simple  fact.  The  J.  C.  Penney  Company  is 
all  of  us,  not  some  of  us.  Therefore,  when 
I  talk  to  you  about  opening  stores,  operating  them 
economically,  cutting  overhead,  training  men  and 
the  like,  I  am  talking  to  you  for  our  mutual  bene- 
fit and  I  am  not  standing  apart  to  criticise  you. 

Our  interests  must  necessarily  be  and  remain 
mutual.  And  by  our  interests  I  mean  our  attitude 
toward  our  work  and  toward  the  men  who  come  to 
us  to  be  educated  and  trained  in  our  method  of  do- 
ing business. 

It  is  just  as  true  today,  as  it  has  been  ever  since 
our  Organization  was  formed,  that  every  dollar 
of  our  gross  income  must  be  earned  by  hard  work. 
It  is  just  as  necessary  today,  as  it  was  at  first,  that 
we  increase  the  number  of  dollars  by  personally 
selling  to  the  customer  our  splendid  service  pos- 
sibilities, just  as  we  sold  them  in  the  beginning. 

59 


Nothing  can  take  the  place  of  the  spoken  word  be- 
tween salesman  and  customer.  This  is  the  best  pos- 
sible form  of  advertising.  Nothing  can  ever  take 
the  place  of  the  long  industrious  hours  spent  in 
developing  our  business.  It  was  a  pleasure  for  me 
to  read  some  days  ago  that  John  Wanamaker  be- 
gan the  celebration  of  his  eighty-third  birthday  by 
punching  the  time-clock  in  his  Philadelphia  store 
at  8 :05  a.  m.,  and  apologizing  for  being  late  five 
minutes. 

But  earnest  as  I  feel  about  all  of  these  things  and 
persuaded  as  I  am  that  there  is  much  of  our  garden 
still  uncultivated,  yet  I  must  say  to  you  that  I  look 
upon  our  development  thus  far  in  our  history  with 
pleasure  and  satisfaction. 

You  men  are,  in  intention  and  action,  to  be  com- 
mended for  the  fine  work  you  are  doing.  I  know 
that  you  are  earnest,  industrious  and  desirous  of 
increasing  business.  I  know  that  your  minds  and 
hearts  are  right.  I  know  that  not  one  of  you  fails, 
so  far  as  in  him  lies,  to  do  the  best  that  can  be  done 
in  any  situation.  But,  men,  here  is  a  word  of 
warning: 

A  man  cannot  continue  to  work  into  the  future 
with  what  he  knows  today.  He  must  constantly 
study  himself,  his  men,  his  business.  He  must 
study  this  Organization,  its  history,  development, 
present  condition  and  possible  future.  He  must 
not  let  a  day  go  by  without  doing  something  to  in- 
crease his  power  over  what  it  was  the  day  before. 
There  are  better  ways  of  doing  everything  than  the 
ways  we  know,  for  the  simple  reason  that  the  best 
way  to  do  anything  has  not  yet  been  found.    Let  us 

60 


keep  on  working,  studying  and  investigating  to 
find  these  better  ways.  We  shall  discover  that  our 
present  garden  will  yield  us  a  far  larger  crop  than 
we  are  gathering  as  yet  and,  at  the  same  time,  we 
shall  learn  how  better  to  handle  any  new  gardens 
we  may  start. 

Back  of  the  Golden  Rule  is  the  personal  obliga- 
tion of  everyone  of  us  to  build  character,  for  char- 
acter will  carry  a  man  through  good  times  and  bad 
times,  over  easy  places  and  hard  places.  Character 
builds  a  man  solidly  into  the  best  there  is  in  his 
community.  Character  is  the  greatest  training 
force  that  you  Managers  can  employ  to  develop  a 
new  man.  Remember  that  the  men  who  come  to 
you  for  training  will  reflect  you.  Let  them  reflect 
a  big,  earnest,  capable  and  characterful  model. 

You  can  do  all  these  things,  for  the  possibility  of 
them  all  lies  in  you.  We  have  none  of  us  reached 
the  limit.  A  broad  highway  stretches  before  us 
along  which  we  may  travel,  carrying  our  business 
into  new  places,  extending  our  unusual  service  pos- 
sibilities, enlarging  our  great  family  of  patrons,  to 
everyone  of  whom  it  should  be  our  constant  care  to 
impart  the  nature  and  extent  of  the  service  we  can 
render. 

1.  I  can  see  in  my  imagination  everyone  of  us 
fully  active,  not  partially  active,  in  the  great  round 
of  our  duties. 

2.  I  can  see  us  all  interested  in  the  success  of  this 
Organization,  making  its  development  our  aim  and 
purpose,  our  one  real  interest  in  life,  knowing  that 
the  success  of  all  will  take  care  of  the  well-being  of 
the  individual. 

61 


3.  I  can  see  our  chain  stretching  its  length  across 
our  country,  establishing  itself  as  a  service-giver  to 
an  ever  increasing  number  of  people. 

4.  I  can  see  our  Organization  growing  broadly, 
deeply  and  solidly,  bringing  into  its  fold  more  and 
more  men  to  aid  in  the  carrying  out  of  the  im- 
mense service  program  that  our  growth  involves. 

5.  I  can  see  you  Managers  multiplied  to  the 
thousand  mark  and  beyond,  a  veritable  army  of 
able  men,  capable  of  conducting  this  great  business 
in  safety  through  the  lean  and  the  fat  years  that  are 
to  come. 

6.  I  can  see  the  army  of  Managers  developing 
themselves  through  experience,  persisting  in  the 
pursuit  of  that  education  which  enlarges  men  and 
thus  makes  them  the  able  and  capable  trainers  of 
the  ever  increasing  number  of  men  who  are 
destined  to  come  to  us  as  part  of  the  working  force 
of  this  expanding  Organization. 

7.  I  can  see  us  all  so  increasing  our  faith  in  the 
ultimate  high  purpose  of  our  Organization  that  we 
become  more  and  more  unselfish  in  our  relations  to 
it,  more  and  more  thoughtful  and  generous  in  our 
relations  to  one  another,  more  and  more  inspired  by 
the  fact,  (for  it  is  the  fundamental  fact  of  our  Or- 
ganization) that  it  is  only  in  the  growth  of  the  Or- 
ganization as  a  whole  that  the  individual  finds  his 
well  being  and  reward. 

8.  I  can  see  all  this  as  the  beckoning  goal  that 
draws  us  onward  by  its  promises.  But  let  us  re- 
member that  we  reach  no  distant  goal,  except  by 
setting  out  from  the  place  where  we  are.    We  must 

62 


go  thence  to  the  place  we  want  to  reach.  The  great 
vision  of  the  future  must  be  realized  in  the  actual 
accomplishment  of  today  and  tomorrow. 

Let  me  quote  you  some  lines  that,  to  my  mind, 
convey  the  relation  of  vision  and  of  the  day's  work. 
You  will  not  fail  to  note  that  their  meaning  is  that 
we  shall  reach  what  we  want  to  be  by  the  solicitude 
with  which  we  accomplish  what  falls  to  our  hands 
to  do  every  hour  of  our  lives : 

We  will  do  so  much  in  the  days  to  come. 

But  what  have  we  done  today? 
We  will  give  our  gold  in  a  princely  sum. 

But  what  did  we  give  today? 
We  will  lift  the  heart  and  dry  the  tear, 
We  will  plant  a  hope  in  the  place  of  fear, 
We  will  speak  the  words  of  love  and  cheer. 

But  what  did  we  speak  today? 

We  will  reap  such  joys  in  the  bye  and  bye. 

But  what  have  we  sown  today? 
We  will  build  us  mansions  in  the  skies. 

But  what  did  we  build  today? 
'Tis  sweet  in  idle  dreams  to  bask; 

But  here  and  now,  do  we  do  our  task. 
That  is  the  thing  our  soul  must  ask: 

What  have  we  done  today? 


63 


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